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Peso falls to 18 to the US dollar as oil, Fed worries weigh on both currencies

MND Staff
By MND Staff
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Banxico's closing USD:MXN rate, reported daily at 2:10 p.m., was 17.94, a depreciation of 1.3% compared to the closing rate on Friday. (Sandra Gabriel/Unsplash)

The Mexican peso depreciated to 18 to the US dollar on Monday, a weakening of more than 1% compared to Friday and over 6% compared to its strongest position this month.

The sharp depreciation on Monday came just weeks after the return of the “super peso” was proclaimed at a time when the peso was trading at below 17 to the greenback.

A USD:MXN exchange rate of 18, as was the going rate early Monday afternoon, represents a depreciation of 6.2% for the peso compared to its strongest closing position this month — 16.89 to the greenback on Sept. 4, according to the Bank of Mexico (Banxico).

At 3 p.m. Mexico City time, the peso was trading at 17.99 to the US dollar, according to Bloomberg.

Banxico’s closing USD:MXN rate, reported daily at 2:10 p.m., was 17.94, a depreciation of 1.3% compared to the closing rate on Friday.

The newspaper El Financiero attributed the peso’s decline on Monday to a greater aversion to risk, an increase in oil prices — which rose after U.S. President Donald Trump’s rejection of an Iranian proposal to reopen the Strait of Hormuz within seven days — and expectations of a more restrictive U.S. Federal Reserve, which raised its benchmark interest rate by 25 basis points to a target range of 3.75%-4% earlier this month.

The peso has benefited from the substantial difference between Banxico’s key interest rate (6.50%) and that of the Fed. However, that difference is now smaller than it was at the start of the month, and the gap could close further if the Fed raises its key rate again next month.

For now, the peso is back in a position it was last in almost six months ago.

In an X post on Monday afternoon, Gabriela Siller, director of economic analysis at Banco Base, wrote that the peso hadn’t traded at 18 to the dollar since March 31. In a separate post that includes a graph showing the peso trading at 18 to the dollar, she wrote: “Strong dollar or weak peso? Both.”

In another X post on Monday, Siller noted that the USD:MXN exchange rate was 18.0080 at the end of 2025.

“Everything seems to indicate that it could close around that level again [at the end of] this year,” she wrote.

With reports from El Financiero 

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